A plan to build a soccer stadium for the Earthquakes would be a boon to San Jose’s redevelopment fund, according to a new city analysis. But at the same time, the report concluded, the proposal could actually make things worse for the city’s strapped operating budget.

And therein lies the dilemma: The city’s redevelopment agency is one of the wealthiest in the state, already projected to receive more money than it can legally spend in the next 25 years. Meanwhile, the city is wrestling with an operating budget shortfall that could reach $137 million in five years.

The report’s findings stem from the unusual financing scheme the team’s owner, developer Lew Wolff, has devised to pay for the stadium. He wants city approval to turn industrial property in South San Jose into more lucrative housing, with the profit being used to fund construction of the $100 million facility.

Rezoning the 74 acres in Edenvale, while presumably paving the way for a moneymaking stadium near the airport, would hit the city’s operating fund in several ways:

The city would lose the tax revenues produced by industrial and retail land, which pour cash into the general fund. Compounding that lost income, new housing actually requires the city to spend money. To support new residents, the city must hire more police officers, firefighters and other expensive personnel.

And, because the Edenvale parcel is in a redevelopment area, any new property taxes from development there would go to the redevelopment agency, which by law can’t fund city operating expenses.

“The problem with the city economic development strategy is it’s generating resources for redevelopment and capital projects but not for general-fund ongoing services,” said Bob Brownstein, policy director for Working Partnerships USA, a think tank affiliated with the South Bay Labor Council. “This is essentially more of the same.”

The redevelopment agency stands to gain $5.4 million to $6.5 million annually if the stadium deal and rezoning go through. The large benefit would be fueled partly from the additional property taxes on the 1,300 homes being proposed, but also from allowing more intensive industrial development nearby to offset the loss of jobs on the Edenvale parcel.

The city report, prepared by Berkeley consulting firm Economic & Planning Systems, projects that the city operating budget would lose $100,000 to $1.1 million annually if the land is rezoned.

The amount would be the lesser of the two if the city can find a way to move 450,000 square feet of retail space currently allowed on the Edenvale parcel – and thus save the sales tax dollars it would produce. But the report cautions that may not be possible.

If the retail space can’t be saved, the report notes, the rezoning would then violate the guidelines the council adopted in October to preserve jobs when land is rezoned from commercial purposes to housing.

“The jobs capacity is an important issue,” said Mayor Chuck Reed, who has been a supporter of the Earthquakes but has withheld final judgment on the matter until the deal is fully evaluated, which isn’t expected to happen until later this year.

A second report commissioned by the city projected the annual impact on San Jose’s economy from the soccer stadium would be $49.6 million to $62.3 million.

Economists often come up with widely varying results in such studies. For example, a study commissioned by Wolff last year for his proposed A’s ballpark in Fremont projected total economic impact for Alameda County at $67.8 million. That amount is only slightly larger than San Jose’s analysis, despite an assumption that the A’s ballpark would host twice as many events and have total annual attendance more than four times that of the soccer stadium.

Wolff’s son, Keith, who is leading both development proposals, referred questions on the San Jose studies to city officials.